WORKPLACE PLANNING FOR FLEXIBILITY: STAFFING WITH TEMPORARY EMPLOYEES

LIR 809 WHAT IS CONTINGENT WORK?  Best understood by what it is not:  Not permanent  Not full time with single employer  One definition: Any job in which an individual does not have an explicit or implicit contract for long term employment and where minimum hours worked can vary in an unsystematic manner. Any job in which an individual does not have an explicit or implicit contract for long term employment and where minimum hours worked can vary in an unsystematic manner.

LIR 809 WHAT ARE COMMON FORMS OF ALTERNATIVE EMPLOYMENT?  Temporary help workers  Leased or contract workers  Independent contractors  On-call workers  Part-time workers BLS categories

LIR 809 Alternative Work Arrangements as Share of Total Employment (2001) Source: BLS, “Contingent and Alternative Employment Arrangements, February, 2001” News Release USDL , May 24, 2001.

LIR 809 Trend in Temporary Help Employment

LIR 809 Occupational Distribution of Temporary Workers (Temp. v. Traditional) Source: BLS, “Contingent and Alternative Employment Arrangements, February, 2001” News Release USDL , May 24, 2001.

LIR 809 Occupational Distribution of Independent Contractors (Ind. v. Traditional) Source: BLS, “Contingent and Alternative Employment Arrangements, February, 2001” News Release USDL , May 24, 2001.

LIR 809 Race/Ethnic Composition by Work Arrangement Source: BLS, “Contingent and Alternative Employment Arrangements, February, 2001” News Release USDL , May 24, 2001.

LIR 809 Median Usual Weekly Earnings, February, 2001 Source: BLS, “Contingent and Alternative Employment Arrangements, February, 2001” News Release USDL , May 24, 2001.

LIR 809 Educational Distribution by Work Arrangement, Feb., 2001 Source: BLS, “Contingent and Alternative Employment Arrangements, February, 2001” News Release USDL , May 24, 2001.

LIR 809 Percent of Workforce with Health Insurance Coverage, By Work Arrangement, Feb Source: BLS, “Contingent and Alternative Employment Arrangements, February, 2001” News Release USDL , May 24, 2001.

LIR 809 Work Arrangement Preferences Independent Contractors Temporary Help Workers Source: BLS, “Contingent and Alternative Employment Arrangements, February, 2001” News Release USDL , May 24, 2001.

LIR 809 Part-time as form of contingent  Part-time < 35 hr./wk  Short-term  Temp. pt, rare  Secondary  perm pt, no advance  Retention  Retain valued employees  Most is secondary

LIR 809 Part-time versus full-time hourly compensation

LIR 809 WHO WANTS TO BE PART OF THE CONTINGENT WORKFORCE?  People who want flexibility:  Working mothers  College students  People on periphery of labor market, such as newly retired  Short-term unemployed

LIR 809 WHAT DO CONTINGENT WORKERS WORRY ABOUT?  Insecure economic future  Lack of insurance & pension benefits  Employer inaccuracy in describing & defining job assignments  Being treated like 2nd class citizens

MOVING FROM STRATEGIC DECISION TO IMPLEMENTATION

LIR 809 STRATEGIC QUESTIONS What are the Strategic Goals of our organization?  What are our Core Competencies?  What is our Organizational Culture?

LIR 809 Strategic Staffing Primary Business Supporting Functions Auxiliary Skills Core Skills Future Needs Temp Staffing Core Staffing

LIR STEPS  Define what is core and what is contingent in your organization.  If a job is not core, determine if it should be performed under a regular or alternative work arrangement.  Evaluate the costs and benefits of using contingent workers relative to core workers.

LIR 809 EVALUATING USE OF CONTINGENT WORKERS Need to consider direct costs, indirect costs, and productivity of both core & contingent workers Decision rule: The Ratio of Temporary Productivity to Core Productivity must be equal to or greater than The Ratio of Temporary Costs to Core Costs The Ratio of Temporary Productivity to Core Productivity must be equal to or greater than The Ratio of Temporary Costs to Core Costs

LIR 809 MAKING THIS WORK  Communicate with core employees  Orient temporaries  Think about: space, who answers questions, what training is needed  Be clear about likelihood of permanent hiring

LIR 809 ADVANTAGES & DISADVANTAGES TO CONTINGENT WORK FOR FIRMS  Disadvantages  Promotability  Short-term plan  Risk to workers=> recessions  Loyalty  Less HC invest  Lower per capita Y  Advantages  Lower labor costs  Security for core workers  Less inflation  Flexibility for family issues  Recruiting pool

LIR 809 JOB INSECURITY & CONTINGENT WORK

LIR 809 WHY DOES CONTINGENT WORK EXIST: COMPETING VIEWS  Demand driven:  Meets employers’ needs; way to handle uncertainty  Commonly used evidence  Secular Evidence: Temps used to be pro- cyclical, now lead business cycle  Family char. lack predictive power  Quality of Jobs  Nearly 50% THS involuntary

LIR 809 ALTERNATIVE VIEW OF USE OF TEMPORARY WORKERS  Self-selection model  Family/demographic characteristics suggest that many in contingent arrangement there because meets family needs  Explanation for lower wages after controlling for other human capital:  Wage differential may be CWD for preference for part-time

LIR 809 CONTINGENT WORK AS RESPONSE TO INCREASING UNCERTAINTY  2-Tier workforce:  Core: Salaried employees on payroll for whom traditional values hold  Periphery: weak ties to co. hired for finite periods; few benefits  Core handles stable portion of product demand; periphery handles fluctuating portions

LIR 809 ALTERNATIVE APPROACH: SHARE ECONOMY  Shock of downturn absorbed through lower compensation not layoffs  Initially macro idea  Stimulates productivity  Spreads risk across workers  Firms less afraid to hire  Requires trust between management & firms